The reserve, in Papua New Guinea, probably contains about
12.4 million ounces of gold and 5.4 million tons of copper and
first production could start in 2019 if an initial mine is built
at a cost of about $4.85 billion, the Johannesburg-based company
said in a statement today. The deposit may support a larger mine
at a total cost of about $9.75 billion, it said.

Harmony, which mines more than 90 percent of its metal in
South Africa, is expanding output through projects in the
continent’s biggest economy and ramping up production at its
existing Hidden Valley venture with Newcrest in Papua New Guinea
to take advantage of gold prices that have increased for 11
straight years. It’s spending more on exploration in Papua New
Guinea to reduce the proportion of production in South Africa,
where mines are getting deeper and more costly to operate.

Harmony will aim to raise output from an estimated 1.3
million ounces this fiscal year to 1.7 million in fiscal 2016,
Chief Executive Officer Graham Briggs told investors in
Johannesburg today. Papua New Guinea now represents about 42
percent of Harmony’s metal reserves, compared with 11 percent in
June last year, it said.

Project Funding

Harmony estimates it will be able to fund its share of the
cost of the Wafi-Golpu mine, near Lae in the east of Papua New
Guinea, largely from operating cashflow, Briggs said. Debt,
project financing and bonds are also among funding options, he
said. Harmony’s capital expenditure will probably increase to
about 6.4 billion rand ($762 million) in fiscal 2017, he said.

The new mine “is going to generate some strong cash
flows,” Briggs said at the presentation. It “oozes gold” in
parts, he said. The mine would probably produce copper at a cost
of $0.54 a pound, placing the operation among the world’s 25
percent lowest-cost producers, he said.

Harmony retreated 0.8 percent to 74.99 rand by the close in
Johannesburg, giving a decline of 21 percent this year. Larger
rival AngloGold Ashanti Ltd. (ANG) has fallen 23 percent.